[Lynda03]

Hello,
I have started a small catering company. (partnership) in Mich. I can run circles around the office and the kitchen. My biggest concern and fear is the accounting end of it. I have downloaded quickbooks and have managed to muddle my way thro the very basic steps. I have been keeping records of my expenses and business income. I know I really need to hire an accountant but I have dumped most of everything I have into startup. I have a few questions maybe someone can help me with till then...

How do I pay us? Just take it out of the profits? I have it setup so when I receive payment from services... 25% is going to food cost/ 25% overhead/ 15% Capital/ 35% profit. Keeping in mind that if any one of those categories comes up short, it comes out of the profit.

What are the major things that I can write off at the end of the year and how or where should I keep those records.

I am completely overwhelmed with all this. Wondering if I took on more then I should have. I have spent more hours then I can count in front of this PC trying to inform, teach and learn. I know I will need thicker glasses... Can I write that of tooo?

Any advice will be greatly appreciated, I will checking back soon... with more questions I am sure

Thanks in advance,
Lynda

I double posted this in the small business category as well

[codyman144]

Oh Partnership accounting is fun don't let it get you down :)

Well first off you should have a partnership agreement in writing that spells out exactly how profits and losses are distributed, also what happens if you dissolve the partnership, if a new partner is admitted, or if a partner resigns. I could go on and on about all the things that should be in the agreement but lets save that for another post and you should also see a lawyer about this stuff too.

You can pay yourselves in a few different ways, you can both take a salary (if you both agree on how much), you can periodically draw from your capital account, or you can wait for the profits to be certain and withdraw some or all of the profits that are your share. Again much elaboration could be done here but there is not enough time in one post (I.E. I am leaving out the details).

I am concerned about this setup you mention. When you receive payment for service this should be going to a revenue account period. Not sure how you set up this allocation but it does not make sense to me. When you pay for expenses they should be allocated to the different expenses that you have. Pay for supplies, supplies expense for example.

You can write off any and everything that is a legitimate business expense. You should keep the best records possible of everything that you can.

I am sure you will have more questions so I will leave it here for now. Hope this helps.

P.S. You should check out the bookstore and see if they have "accounting for dummies" :)

[Lynda03]

Thank you for your response JC.


"I am concerned about this setup you mention. When you receive payment for service this should be going to a revenue account period. Not sure how you set up this allocation but it does not make sense to me. When you pay for expenses they should be allocated to the different expenses that you have. Pay for supplies, supplies expense for example."

I am entering it as revenue. Then breaking the gross down allocating a % to be used for food cost/ overhead/ capitol/ profit. To be used for those categories for future events. This is just the way my former boss had his set up and I kind of knew how he did it so it was easier for me to follow. Not that it is the right way, or even easier for that matter. I guess it was just a place for me to start.

Right now we have 1 business account where all of our finical transactions are being done from. I am thinking however it would be much more simple if I had more. I am so nervous that I am going about this the wrong way and I am going to pay a high price later. I am keeping all of our records in quickbooks. (which took me about 3 days to figure out) My boss never used quick books except to do invoicing and write checks.

Any more advice once again would be greatly appreciated

Thanks,
Lynda

[codyman144]

"I am entering it as revenue. Then breaking the gross down allocating a % to be used for food cost/ overhead/ capitol/ profit. To be used for those categories for future events. This is just the way my former boss had his set up and I kind of knew how he did it so it was easier for me to follow. Not that it is the right way, or even easier for that matter. I guess it was just a place for me to start."

This sounds like a good method for budgeting but not really how you want to do financial accounting. The purpose of accounting is recording history, when you are paid by customer credit revenue. When you pay for supplies, materials, services etc. you debt an expense account. Than at the end of any period you calculate net income (profit) the difference between the revenues and expenses. When this is all done the net income can go to the capital accounts.

“Right now we have 1 business account where all of our finical transactions are being done from. “

Are you saying you have one bank account or that you have one account in QuickBooks? How is your chart of accounts set up in QuickBooks? If you have one business bank account that is probably fine for a small business like this. If you only have one accounting – account (for lack of a better term) this is not good at all.

Do some Googleing or go and buy a book on accounting basics, I will help where I can but I can't teach you everything.